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CIRCULAR No. 31/2004/TT-BTC OF APRIL 12, 2004 GUIDING THE IMPLEMENTATION OF THE GOVERNMENT'S DECREE No. 118/2003/ND-CP OF OCTOBER 13, 2003 PROVIDING FOR THE SANCTIONING OF ADMINISTRATIVE VIOLA-TIONS IN THE INSURANCE BUSINESS DOMAIN

Pursuant to December 9, 2000 Insurance Business Law No. 24/2001/QH10 and guiding documents;

Pursuant to July 2, 2002 Ordinance on Handling of Administrative Violations;

Pursuant to the Government's Decree No. 134/2003/ND-CP of November 14, 2003 detailing the implementation of a number of articles of the 2002 Ordinance on Handling of Administrative Violations;

Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 118/2003/ND-CP of October 13, 2003 providing for the sanctioning of administrative violations in the insurance business domain;

The Ministry of Finance hereby guides the implementation as follows:

I. GENERAL PROVISIONS

1. Subjects of regulation and scope of application

1.1. Sanctions against administrative violations in the insurance business domain shall be imposed on individuals, agencies or organizations (hereinafter collectively referred to as "individuals, organizations") that intentionally or unintentionally commit acts of violating law provisions on insurance business activities, which are not criminal offenses but, as prescribed by law, must be subject to administrative sanctions.

1.2. This Circular applies to:

a/ Individuals, organizations committing acts of administrative violation in the insurance business domain as prescribed in Chapter II of Decree No. 118/2003/ND-CP of October 13, 2003 (called Decree No. 118/2003/ND-CP for short).

b/ Foreign individuals, organizations operating in the Vietnamese territory and committing acts of administrative violation in the insurance business domain as prescribed in Decree No. 118/2003/ND-CP, except otherwise provided for by international agreements which Vietnam has signed or acceded to.

2. The sanctioning of administrative violations in the insurance business domain must comply with the general provisions on sanctioning administrative violations in the July 2, 2002 Ordinance on Handling of Administrative Violations (called the Ordinance for short), the Government's Decree No. 134/2003/ND-CP of November 14, 2003 detailing the implemen-tation of a number of the 2002 Ordinance on Handling of Administrative Violations (called Decree No. 134/2003/ND-CP for short), and relevant legal documents.

3. In cases where violation acts show criminal signs, the persons competent to sanction administra-tive violations shall compile dossiers and transfer them to competent authorities for investigation and handling according to law provisions.

4. The collected fines on administrative violations in the insurance business domain must be remitted into the State budget via the accounts opened at the State Treasury. The regime of management of fine receipts and fine amounts shall comply with current law provisions.

II. PRINCIPLES FOR DETERMINING THE SANCTIONING COMPETENCE

1. Only the persons competent to sanction administrative violations as prescribed in Article 25 of Decree No. 118/2003/ND-CP shall have competence to issue decisions to sanction administrative violations in the insurance business domain, with the forms and fine levels falling under the scope of their prescribed competence. It is forbidden to divide a violation into many smaller violations or combine many small violations into a bigger violation for the purpose of altering the sanctioning competence.

2. In the course of inspection and examination, if detecting administrative violations in the insurance business domain, which do not fall under their sanctioning competence, the functional agencies must transfer the violation dossiers to the persons with competence to sanction administrative violations in the insurance business domain for consideration and sanctioning as provided for in Decree No. 118/2003/ND-CP.

3. Where an act of administrative violation falls under the sanctioning competence of many persons, the person who first receives the case shall issue the sanctioning decision.

4. Where many acts of violation fall under the sanctioning competence of a person, such person shall issue a common sanctioning decision which must, however, clearly state each act of violation, the sanctioning form and fine level for every act.

5. Where one of acts of violation may be sanctioned in a form and with a fine falling outside or beyond the competence of the sanctioning person, such person must, within 15 working days after making a written record of the administrative violations, transfer the whole dossier to the competent level for consideration and decision.

6. The competence of the provincial-level People's Committee presidents, the district-level People's Committee presidents and the chief inspectors of the provincial/municipal Finance Services to sanction acts of administrative violation in the insurance business domain as provided for in Article 25 of Decree No. 118/2003/ND-CP is specified as follows:

6.1. The provincial-level People's Committee presidents shall have the following rights:

a/ To serve a caution;

b/ To impose fines of up to VND 70 million;

c/ To apply remedial measures defined in Clause 6 of Article 5, Clause 4 of Article 6, Point a, Clause 3 of Article 8, Point a, Clause 2 of Article 9, Point a, Clause 2 of Article 10, Point a, Clause 2 of Article 11, Clause 3 of Article 15, Point a, Clause 2 of Article 17, Clause 2 of Article 18, of Decree No. 118/2003/ND-CP.

6.2. The district-level People's Committee presidents shall have the following rights:

a/ To serve a caution;

b/ To impose fines of up to VND 20 million;

c/ To apply remedial measures defined in Clause 6 of Article 5, Clause 4 of Article 6, Point a, Clause 3 of Article 8, Point a, Clause 2 of Article 9, Point a, Clause 2 of Article 10, Point a, Clause 2 of Article 11, Clause 3 of Article 15, Point a, Clause 2 of Article 17, Clause 2 of Article 18, of Decree No. 118/2003/ND-CP.

6.3. The chief inspectors of the provincial/municipal Finance Services shall have the following rights:

a/ To serve a caution;

b/ To impose fines of up to VND 20 million;

c/ To apply remedial measures defined in Clause 6 of Article 5, Clause 4 of Article 6, Point a, Clause 3 of Article 8, Point a, Clause 2 of Article 9, Point a, Clause 2 of Article 10, Point a, Clause 2 of Article 11, Clause 3 of Article 15, Point a, Clause 2 of Article 17, Clause 2 of Article 18, of Decree No. 118/2003/ND-CP.

III. APPLICATION OF SANCTIONING FORMS

1. Persons issuing sanctioning decisions must base themselves on the seriousness and nature of the acts of violation as provided for in Chapter II of Decree No. 118/2003/ND-CP to decide on the application of appropriate sanctioning forms.

2. The levels of imposed fines, even after taking into consideration extenuating or aggravating circumstances, must be neither lower nor higher than the prescribed fine bracket.

3. The specific fine levels decided by persons competent to sanction in each case shall be based on the fine bracket prescribed in Decree No. 118/2003/ND-CP, the nature and seriousness of the violations as well as the violators.

4. The lowest level of the fine bracket shall be applied to first-time administrative-violation acts which are unintentionally committed and involve extenuating circumstances prescribed in Article 8 of the Ordinance.

5. The determination of the average level of the fine bracket shall comply with the provisions of Article 24 of Decree No. 134/2003/ND-CP.

6. The highest level of the fine bracket shall be applied to acts of violation involving many aggravating circumstances prescribed in Article 9 of the Ordinance.

7. Only one of the two principal sanctioning forms, either caution or fine, can be applied to one act of administrative violation.

8. Additional sanctioning forms must not be applied independently but be applied in association with principal sanctioning forms.

IV. SANCTIONING PROCEDURES

1. The procedures for sanctioning administrative violations in the insurance business domain shall be carried out in accordance with the provisions in Chapter IV of Decree No. 134/2003/ND-CP. The record and decision forms used for the sanctioning of administrative violations in the insurance business domain are issued together with this Circular (not printed herein).

2. Due to the specific characteristics of business insurance activities:

2.1. The simple sanctioning procedures prescribed in Article 54 of the Ordinance and Article 19 of Decree No. 134/2003/ND-CP shall not apply to acts of administrative violation in the insurance business domain. All cases of sanctioning administrative violations in the insurance business domain must be based on the written records of administrative violations, made by competent agencies and persons in the forms and with the contents prescribed by law.

2.2. The time limit for issuing decisions to sanction administrative violations in the insurance business domain shall comply with Clause 2, Clause 3, Clause 4 and Clause 5, Article 21 of Decree No. 134/2003/ND-CP.

3. The forcible execution of administrative violation-sanctioning decisions shall comply with Article 66 and Article 67 of the Ordinance.

V. ACTS OF VIOLATION

A number of acts of violation provided for in Decree No. 118/2003/ND-CP are guided in detail as follows:

1. Violating the regulations on management and use of establishment and operation licenses, representative office-establishing licenses (hereinafter called licenses for short) as prescribed in Article 5 of Decree No. 118/2003/ND-CP

1.1. Failing to publicize or untruthfully publicizing the contents of operation according to relevant law provisions means non-complying by insurance enterprises or insurance brokerage enterprises with the regulations on the publication in the press of principal contents of their licenses as provided for in Clause 2, Article 8 of the Government's Decree No. 42/2001/ND-CP of August 1, 2001, which details the implementation of a number of articles of the Insurance Business Law.

1.2. Failing to operate after 12 months as from the date of being granted the licenses means non-performing any activities provided for in Clause 1, Article 60 of the Insurance Business Law by insurance enterprises; any activities provided for in Article 90 of the Insurance Business Law by insurance brokerage enterprises.

1.3. Publicizing late as compared to the prescribed deadline the changed contents as prescribed means failing by insurance enterprises to publicize the approved changed contents according to law provisions after 30 days as from the date the Ministry of Finance approves such changes.

1.4. Doing business or operating at variance with the contents inscribed in the licenses means opera-ting by insurance enterprises, insurance brokerage enterprises, representative offices of foreign insurance companies or insurance brokerage companies in contravention of or outside their licenses' contents related to the operation domains, the permitted professional operations, geographical areas of operation, target clients and operation duration.

1.5. Accepting insurance brokerage services provided by foreign insurance brokerage enterprises not permitted to operate in Vietnam means accepting by domestic insurance enterprises the insurance brokerage services for risks arising in Vietnam provided by insurance brokerage enterprises headquartered overseas and not permitted to do business in Vietnam.

2. Illegal sale promotion as prescribed at Point c, Clause 1, Article 10 of Decree No. 118/2003/ND-CP means the use by enterprises of sale promotion forms banned by the Commercial Law and other legal documents, including:

a/ Sale promotion of insurance products which have not yet been registered, promulgated or approved by the Ministry of Finance;

b/ Sale promotion which is untruthful or causes misunderstanding of insurance services so as to cheat clients;

c/ Sale promotion causing harms to the landscape or environment;

d/ Failure to fulfil or to correctly fulfil promises to give gifts or prizes;

e/ Other forms of sale promotion banned by law.

3. Illegally forcing to enter insurance contracts as prescribed in Article 11 of Decree No. 118/2003/ND-CP means abusing by agencies, organizations, enterprises or individuals their influence on, or applying administrative measures against, or other forms of putting pressure on, people with insurance demands to purchase insurance at a certain insurance enterprise, or insurance enterprises to receive insurance brokerage or re-insurance brokerage services against their will.

4. Acts of seeking personal profits in insurance participation, insurance indemnification, insurance sum payment and insurance-complaint settlement prescribed in Article 15 of Decree No 118/2003/ND-CP means deceitful acts deliberately committed by organizations or individuals in order to make illicit profits in insurance participation, insurance indemnification, insurance sum payment and insurance-complaint settlement.

Colluding with insurance beneficiaries prescribed at Point b, Clause 2, Article 15 of Decree No. 118/2003/ND-CP means acts of colluding with insurance beneficiaries in forging documents, supplying false information, framing scenes or other illegal acts in the process of claiming for insurance sums, settling insurance claims or paying insurance sums.

5. Violating the regulations on inspection, examination and supervision by competent State authorities as prescribed in Article 24 of Decree No. 118/2003/ND-CP

5.1. Acts of delaying, shirking or employing tricks, including:

a/ Failing to supply, or deliberately prolonging the time of supplying, dossiers, documents at the requests of examination or inspection teams.

b/ Failing to assign people, assigning people belatedly, or assigning people with no responsibility, to work with examination or inspection teams.

c/ Failing to supply truthful information, reports, vouchers, accounting books and other dossiers and documents at the requests of examination or inspection teams.

d/ Other acts of delaying, shirking or employing tricks as prescribed by law.

5.2. Intervening in the handling by inspection agencies or competent State bodies includes:

a/ Supplying false information to superior administrative agencies in order to putting pressure on agencies with handling responsibility.

b/ Supplying untruthful information to the mass media in order to put pressure on, or obstruct, the handling.

c/ To make threats or employ other forms to obstruct the handling agencies.

VI. COORDINATION AMONG FUNCTIONAL AGENCIES IN THE SANCTIONING

1. In the course of performing the State manage-ment function in localities, if discovering acts of administrative violation in the insurance business domain, before issuing sanctioning decisions, the persons with sanctioning competence shall have to exchange opinions in writing with the Ministry of Finance.

Within 10 working days after receiving the written requests, the Ministry of Finance shall have to reply in writing to the persons with sanctioning competence on its opinion on the sanctioning.

Basing themselves on the opinion of the Ministry of Finance, the persons with sanctioning competence in localities shall issue decisions to sanction administrative violations in the insurance business domain.

2. Acts of administrative violation related to insurance business activities, which are against the State management regulations in other domains such as tax, accounting regime, business registration', shall be handled according to the decrees on sanctioning of administrative violations in the relevant specialized domains.

3. Where an organization or individual commits acts of violation in different localities, the agencies which detect such acts must make written records of the administrative violations, stop such violations and notify the Finance Ministry's inspection agency thereof for coordination in handling the violations.

4. Decisions of the inspectorates of the provincial/municipal Finance Services and the Ministry of Finance on sanctioning administrative violations in the insurance business domain must be sent to the People's Committees of the localities where the acts of administrative violation are detected and handled for monitoring and assurance of execution.

5. Within seven working days after issuing decisions to sanction administrative violations in the insurance business domain, the persons issuing such decisions shall have to send one copy thereof to the Ministry of Finance for monitoring and coordinated settlement.

VII. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect 15 days after its publication in the Official Gazette.

2. The chief inspector of the Ministry of Finance shall direct and guide units and individuals within the financial inspection system to firmly grasp and seriously carry out the sanctioning of administrative violations in the insurance business domain.

3. In the course of implementation, any problems should be promptly reported to the Ministry of Finance for consideration and settlement guidance.

For the Minister of Finance

Vice Minister
LE THI BANG TAM